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Can we review the credit history of the primary authorized signer on a business account before opening the account? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Can we review the credit history of the primary authorized signer on a business account before opening the account?

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We believe you should obtain written permission from this individual before running a credit check related to the opening of a business account. 

The Fair Credit Reporting Act permits a bank to obtain an individual’s credit report in only a limited number of circumstances. In our view, the only permitted circumstance in the situation you describe would be when you obtain the individual’s prior written consent.

For resources related to our guidance, please see:

  • Fair Credit Reporting Act, 15 USC 1681b(a) (“Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other: . . . (2) In accordance with the written instructions of the consumer to whom it relates. . . (3) To a person which it has reason to believe . . . (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer . . . (F) otherwise has a legitimate business need for the information (i) in connection with a business transaction that is initiated by the consumer”)